Los Angeles partner Fred Reish and Washington, D.C., counsel Brad Campbell spoke to PLANSPONSOR about impending regulation 404(a)(5) and how plan sponsors should be preparing.

Under 404(a)(5), plan sponsors have 60 days from the effective date of the 408(b)(2) provider disclosure rules to supply fee information to participants.

Fred expressed his concern at plan sponsors’ lack of urgency in preparing for 404(a)(5). He thinks they believe the burden of participant disclosure falls on the recordkeeper, while, in reality, the recordkeeper is simply a service provider operating under a contract—not one ­acting as the fiduciary.

“It’s still the plan sponsor’s responsibility,” he said. “What [plan sponsors] haven’t really looked at is that the legal burden is on the ERISA plan administrator.”

Fred discussed reasons why there has been less urgency concerning 404(a)(5) and said plan sponsors should take action immediately by contacting their service providers and recordkeepers to request samples of the information that participants will receive.

In terms of how the mandated disclosures can be made, Brad told PLANSPONSOR that the DOL has made it difficult for plan sponsors to issue via electronic disclosures. “The DOL is really behind the times. There are several different methods you might be able to use; however ... the DOL is taking a position that is rooted in the past,” he said.

“It would be much easier if you could turn it around and have electronic disclosure be the default,” he added.

He added that the DOL fears partic­ipants may not receive the disclosures if they are sent electronically. Many plan sponsors have been requesting that the DOL clarify the electronic disclosure rule, he said: “[w]hether the DOL will do that or not is hard to predict.”

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